10 startups that shut down in 2016

Sudden shutting down of some startups like Dazo came as a surprise to many while others like PepperTap went out of business due to pressure from rivals from Grofers and Bigbasket, which raised substantial funding.

Lack of funds, plummeting sales and rising competition were the major reasons for the shutdowns.

While 2015 saw launch of three to four startups a day, the second quarter of 2016 witnessed a lot of layoffs and shutdowns. Lack of funds, plummeting sales and rising competition were the major reasons for the shutdowns. 2016 was deadly mainly for food startups such as TinyOwl, Dazo, ZuperMeal and lot more.

Here are 10 leading startups that shut their shops in 2016:

1. TinyOwl Food-ordering firm TinyOwl shut down its operations in May in all 11 cities where it was operational, except Mumbai. The move was, however, said to be temporary as the company wanted to re-brand itself and return with a better product. Founded in 2014, the startup faced several financial problems and laid off more than 600 employees between September 2015 and January 2016.

2. Dazo Dazo, an app-based service that curated and delivered meals, has suddenly shut down its operations in October this year—barely a year after it started. It came as a surprise to many as the company was backed by bigwigs such as Google India chief Ranjan Anandan, TaxiForSure co-founder Aprameya Radhakrishna, and former Freecharge chief executive Alok Goel. But Dazo is not an exception. Several food delivery startups have taken a hit in 2016 primarily because they were struggling to raise fresh rounds of funding and do not have money to sustain operations beyond a few months.

3. PepperTap On-demand grocery-delivery startup PepperTap rolled back its consumer-centric app in April 2016. The move to shut down its operations came due to pressure from rivals including Grofers and Bigbasket, which raised substantial funding. It harmed employees as well as its sister concern logistic company NuvoEex which has Snapdeal as its biggest customer. The startup was launched in November 2014 and had raised funding in four rounds from Sequoia Capital, SAIF Partners, Snapdeal and others. It had also acquired another budding hyperlocal grocery marketplace, Jiffstore, but all were in vain.

4. Fashionara Bangalore-based Fashionara, which was launched by former Reliance Trends CEO Arun Sirdeshmukh and former Times Internet Chief Technology Officer Darpan Munjal in 2012 closed its business in May 2016. It raised $4 million from Helion Venture Partners and Lightspeed Venture Partners and scaled business in apparel, accessories and footwear segment. Unsuccessful attempts to raise money or find buyers were forcing some of the fashion portals—which had resorted to deep discounting to lure customers but were confronted with a cash crunch—to close or scale back their operations.

5. Purple Squirrel Purple Squirrel, an EdTech financial startup, backed by Matrix, closed down business in May 2016. The Mumbai-based startup was launched to connect students with industry leaders and big companies for industrial exposure and training. However, it was forced to shut down due to continuously dipping sales and increasing cash burn.

6. AskMe The consumer internet search platform shut down in August. The company probably took the decision due to severe cash crunch. This unplanned shut down, according to sources, is due to the equally unplanned exit of its principal investor Astro Holdings. The shutdown left about 4,000 of its employees jobless. A variety of reasons, from weak technology to aggressive acquisitions, are said to be responsible for the online retailer's failure.

7. Zupermeal Another surprising shutdown was of ZuperMeal, a home-delivery food venture backed by world-famous chef Sanjeev Kapoor. It allowed users to pre-order food from nearby restaurants. It closed its operations in May after just eight months of raising seed funds from the celebrity chef Sanjeev Kapoor. It had raised an undisclosed amount from overseas investors in October 2015.

8. AUTOnCAB Gurgaon-based autorickshaw booking app AUTOnCAB has shut down its operations owing to stiff competition from its heavily funded rivals. Launched in 2014, the startup laid off 40 employees in the process. Its co-founder Vinti Doshi said that Uber and Ola have been offering a lot of discounts and incentives and they did not unnecessarily want to burn cash. The company reportedly was in talks to raise fresh funding for a long time but failed to seal a deal.

9. GrocShop The Mumbai-based startup offered grocery shopping from the comfort of homes or offices at competitive costs. The startup was founded in November 2014 by IIT-Bombay alumni Rahul Kumar and Ayush Garg. It was a part of Microsoft's startup programme, BizSpark, and also among the 16 startups which were selected for the Google Launchpad programme. It reportedly failed to find a profitable growth model in a segment which was otherwise attracting investors in droves.

10. FranklyMe Another name in the failed startups list is FranklyMe! It was a video micro-blogging website founded by Abhishek Gupta and Nikunj Jain in 2014 with the premise of letting people express themselves through videos. It has raised $600k seed funding from Matrix partners. In another round, it has received an undisclosed amount from undisclosed investors. Despite the fact that it has been a well funded company, it failed to capture the market attention and closed down all operations in February 2016.